SafeGuard World International: Safeguarding Global Payroll – Bjorn Reynolds

Multinational companies are becoming increasingly aware of the benefits of having thorough pan-organisational payroll information. Bjorn Reynolds, CEO of SafeGuard World International, explains to Rod James how new technology can drill down into employee data, facilitating better use of capital and allowing for more informed commercial decisions.

Today it is easier than ever for companies to open international subsidiaries. More flexible business regulations, improved communications and easier cross-border money transfers have led to a flurry of expansion activity both from larger firms and small and medium-sized enterprises. But that is not to say that no challenges remain.

Local tax and planning laws can be confusing, keeping track of many different sets of regulations even more so. From the banking side, the need for multiple international accounts can result in prohibitive amounts of paperwork and increased difficulty when it comes to ensuring compliance. One of the most significant difficulties, which has become increasingly important in recent years, is how to implement an efficient, uniform payroll system across an entire multinational organisation.

Traditional approaches to this have been fragmented and not entirely successful. Some companies have chosen to contract a local vendor on a country-by-country basis; this ensures that there is sufficient local expertise to handle issues of compliance, but makes keeping tabs on the many sets of international payroll regulations and labour laws both difficult and expensive. In addition, such approaches lead to inconsistent processes, and difficulty in monitoring and reporting payroll information.

Another common solution is the introduction of an enterprise resource planning (ERP) system. While this can deliver automated, standardised processes, which is beneficial from a data-auditing perspective, the cost of such all-encompassing solutions makes them unviable for many and can, in some cases, lead to a disjointed, multi-platform approach.

For example, a typical organisation might have a large proportion of its employees based in a Tier 1 country and smaller groups in Tier 2 and Tier 3 countries. An ERP system could prove financially viable for the former, but not for the smaller subsidiaries, leading the two groups to adopt different payroll approaches. This operational disparity leads to a hybrid payroll system that is costly, lacking in transparency and consequently more risky from a compliance perspective.

"Often, a company will want to look at data consolidated across all of its countries but won't have the means. We can drive these analytics, centralise operations and reduce costs as well."

More effective, uniformly applicable systems are needed. According to Bjorn Reynolds, CEO of leading payroll services provider SafeGuard World International, the economic difficulties of recent years have only exacerbated this.

"Bearing in mind the turbulence of recent years, we find that clients in the financial area are struggling with one big question – how do I get all of my pay data and employee information onto a common system so that it can be better used?" he explains. "A multinational company with a presence in 20 countries would historically have allowed all of them to make their own purchasing decisions, all with different ways of processing payroll. Its head office would not have leveraged any global procurement power, would have had no visibility, and would have had no idea how good the decisions its entities had made were."

It is the desire to overcome this, combined with the need to comply with new accounting regulations, which has led to the emergence of companies like SafeGuard World International. With fully managed services in more than 80 countries, its Global Payroll Management System offers thorough end-to-end visibility of people costs. Based on a software-as-a-service (SaaS) platform, it looks to combine the respective efficiencies of local payroll outsourcing and ERP system implementation.

"Improvements in technology and the increased availability of SaaS-based solutions are allowing companies like us to deliver a model that was not available before," Reynolds explains. "We can keep all of a company's data on one platform, on which our clients can see and control their payroll, and ensure that it is compliant with Sarbanes-Oxley regulations."

As the international payroll segment has grown, a number of platforms have emerged that allow companies to obtain better data visibility or even see all their international payroll costs in a single currency. Few, however, give a company access to in-depth granular data, accurate analysis of which can help drive cost savings and efficiencies. Data can be broken down by entity, department or pay grade and can even be evaluated across multiple analytics. Being able to understand the 'like-for-like' cost of employees across different locations allows a company to make much more informed commercial decisions.

"The number of multinational companies that have no idea of their headcount and no idea of how much they spend on their people is quite surprising," Reynolds says. "Often, a company will want to look at data consolidated across all of its countries but won't have the means. We can drive these superior analytics, centralise operations and reduce costs as well."

SafeGuard World International's platforms can operate in any country and cost nothing like as much to roll out as an ERP system. Maintenance costs are low and SaaS solutions can override or integrate with any legacy financial or HR systems that might already be in place. This standardised one-stop solution from a single vendor saves money and allows companies to take advantage of economies of scale.

"We build systems that are fit for purpose; we don't take an existing platform and try to transform it into a global payroll solution like others have tried to do," Reynolds says. "Our competitors have to reconfigure their application or payroll rules each time; by contrast these payroll rules are already configured into our systems. The cost of being able to deploy such a solution compared to a traditional ERP system is a quantum shift."

The comprehensive nature of the solution is combined with a localised delivery model. SafeGuard World International has technology suppliers in every country in which it operates and has set up partnerships with local payroll providers to offer customised service.

"We carry out thorough due diligence on all of our providers, so there is better auditing of our supply chain than there would be if our customers were to manage it themselves."

"From a compliance perspective, the payroll systems and requirements of our customers are very different in each country," Reynolds explains. "By partnering with payroll providers in their own right we can manage that quite easily. We also carry out thorough due diligence on all of our providers, so there is better auditing of our supply chain than there would be if our customers were to manage it themselves."

Looking ahead, as emerging markets grow and become increasingly open, Reynolds sees relationships with payroll vendors becoming more numerous and geographically diverse.

"We have partnered with some of the largest payroll firms in India and China, combining our technologies with their strength in those countries," he explains. "I think this means that we are going to get an awful lot of client acquisition in these markets, as they have been reasonably protected from the bigger suppliers of payroll solutions up to this point."

Reynolds believes that South America will be an especially attractive growth market. Companies in the region already have geographically dispersed workforces and are beginning to see the cost-saving benefits that payroll outsourcing affords.

"A lot of organisations out there have historically had employee populations across the continent, but now we are seeing far more firms with a desire to outsource," he says. "They are moving in the same direction as the western markets, which are fairly used to looking at payroll in this way."

With cost-effectiveness and transparency likely to remain a top priority for corporates over the next few years, the global payroll segment looks set to continue on a path of growth. Reynolds feels that SafeGuard World International is better placed than most to take advantage.

"Global payroll is a fairly new market, less than ten years old," he explains. "By managing a multinational with a single contract over multiple geographies, we are already unusual. This is solely what we focus on, we are ahead of the game in understanding the right delivery model and we have a good client roster. These fundamentals give us a real competitive advantage."